Simons v. Porterfield

WELLER, J.

This is a consolidated action involving the relative rights of mortgagee, beneficiary under a trust deed and mechanic’s lien claimants.

The facts necessary to an understanding of the controversy are set forth in the findings of the court. It appears that defendant W. L. Porterfield was, on October 14, 1915, the owner of certain real property in Long Beach, and on that day he and his wife executed a mortgage on the property in favor of Harry E. Martin for the sum of twenty-seven thousand dollars, which mortgage was - recorded October 20, 1915, and, on October 25, 1915, assigned by Martin to John Watry, the latter paying Martin the full amount of the note secured by the mortgage. Concurrently with the execution of the note and mortgage, Porterfield and wife also executed their note for ten thousand five hundred dollars, and secured payment thereof by a trust deed on the property; and on April 25, 1916, signed another note for one thousand dollars, secured by the same trust deed. On October 15, 1915, Porterfield entered into an agreement with Martin, by the terms of which the latter undertook to construct a building upon the premises covered by the mortgage and trust deed, and to clear the title of certain other liens then existing against the property. These agreements on the part of Martin constituted the only consideration

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for the execution of the notes secured by the mortgage and trust deed.

On April 25, 1916, Martin borrowed of John Watry the sum of nine thousand five hundred dollars, and from Amanda M. Allen the sum of two thousand dollars, giving his notes for these amounts to the respective parties, and as security he pledged the two Porterfield trust deed notes. At the time of the loan of the two thousand dollars made by Amanda M. Allen, she did not know of the contract between Porterfield and Martin, or that the building was being constructed. Martin failed to complete his contract according to its terms, and as the result Porterfield became entitled to credits against him in excess of the amount of the trust deed notes.

In its conclusions of law the court adjudged the foreclosure of the twenty-seven thousand dollar mortgage; that the assignment of the trust deed notes was subject to the equities in favor of Porterfield, so far as Watry was concerned, but not as against Amanda M. Allen; and ordered that the proceeds of the sale of the property be first applied to the satisfaction of the mortgage, and next to the payment to Amanda M. Allen of the amount found due on her two thousand dollar note. This appeal is from that portion of the decree adjudging the claim of Allen to be superior to the offset of Porterfield with .relation to the trust deed notes.